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The best data center REITs give you a way to earn income from the artificial intelligence boom by investing in the real estate behind it. A data center REIT is a real estate investment trust that owns and leases the facilities where companies run the servers, storage, and networking gear behind AI, cloud computing, and the internet. As the AI buildout turns into a physical infrastructure land grab, that digital real estate has become some of the most mission-critical property on the market.
The demand behind that infrastructure is substantial. As I noted in a recent Market360 article, FactSet forecasts roughly 65% earnings growth for the S&P 500 information technology sector in the third quarter, as the AI and data center buildout fuels demand for semiconductors, memory and power equipment. To map out how to invest in that boom without taking on too much risk, I sat down with real estate expert Brad Thomas of Wide Moat Research on the latest episode of Navellier Market Buzz. Here are the two data center REITs Brad highlighted, why he favors one at current valuations, and how he separates durable dividends from tempting but risky yields..
Why Data Center REITs Are in a Buy Window
Higher interest rates have hit real estate hard for the better part of two years. Rising borrowing costs squeeze cash flow, make new acquisitions harder to justify, and put downward pressure on property values. As Brad pointed out, that same dislocation creates an opportunity for investors focused on blue-chip REITs with strong balance sheets.
Think about a small developer who bought an apartment complex or office building when rates were low and now has to refinance that mortgage at today’s higher rates. If the owner can no longer afford the mortgage, they may have to surrender the property to the lender … effectively “handing back the keys.” Stronger, blue-chip REITs are positioned to benefit from that distress because they have two powerful competitive advantages: access to lower-cost capital and the scale to pursue opportunities smaller owners cannot. That is how a difficult environment can create opportunities for financially strong REITs. (For Brad’s full take on the setup, see his conversation with me in Is It Time to Buy These 2 Data Center REITs?)
How to Avoid the “Sucker Yield” Trap in REITs
When investors shop for the best data center REITs, the most common mistake is chasing the biggest headline yield. Brad calls that a “sucker yield,” a payout that looks too good to be true. Whether it is 9%, 10%, 12%, or 14%, an unusually high yield is often a warning sign rather than a bargain, and reaching for it is one of the fastest ways to erode your principal when the dividend finally gets cut.
The fix is to focus on the quality of the dividend, not the size of it. That means looking under the hood at the balance sheet: well-laddered, fixed-rate debt with maturities pushed out into the future, an investment-grade credit rating, and a conservative payout ratio that leaves a cushion for hard times. Realty Income (O) is the textbook example Brad points to. Counting its public and private history, it has a decades-long record of dividend growth, and it kept raising earnings even through stretches when large tenants stopped paying rent. That is the kind of durability worth paying for.
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2 Data Center REITs to Consider for the AI Boom
Data centers power everything from AI models to electric vehicles to the cell towers overhead, and supply is genuinely scarce because many markets have placed moratoriums on new builds. That scarcity is what makes the blue-chip owners so valuable. Here are the two data center REITs Brad singled out.
Digital Realty Stock (DLR)
Digital Realty Trust (DLR) operates roughly 300 data centers around the world. It has delivered highly sustainable growth, and consensus estimates point to a growth rate near 17% for 2026. After a modest pullback the stock is not a deep bargain, and Brad considers it closer to fairly valued today, but the quality is not in question: Digital Realty carries a BBB+ credit rating from S&P and has paid dividends for more than two decades. It is the kind of company investors consider for staying power rather than a quick re-rating.
Equinix Stock (EQIX)
Equinix (EQIX) runs a global footprint of about 280 data centers across 77 markets, and it is the name Brad places squarely in his buy zone after a modest, rate-driven pullback. According to Brad, the company has never posted a year of negative earnings growth since it converted to a REIT in 2015, and it has raised its dividend every year since. It yields about 2%, carries an investment-grade BBB+ balance sheet, and deliberately keeps its payout ratio low so it can reinvest in the business. Stack an estimated 10% growth forecast for next year on top of the current entry point and the margin of safety, and Brad frames Equinix as roughly a 20% total-return opportunity. Of the two, it is the one he would buy today.
Data Center REITs vs. AI Stocks: Where Micron (MU) Fits
Data center REITs let you collect the rent on the AI boom, but an attractive story still has to be backed by hard numbers, and the buildings are empty without the silicon inside them. That is where the technology side comes in. Micron Technology (MU) was recently the single most-searched ticker on our Stock Grader AI. That tells me investors are paying close attention to the memory-chip story.
The risk with AI names is what I call the coordination trap: when everyone leans on the same generic tools, they crowd into and out of the same handful of stocks at the same time. That is why I screen with an independent, math-based system, my Stock Grader, to find A-rated stocks on sales growth, earnings momentum, and institutional buying pressure before the crowd catches on. I walk through how that screen works, and the two sectors it is flagging now, in The 2 Hottest Places to Hunt for A-Rated Stocks. Data center REITs offer an income-focused way to participate in the AI buildout, while fundamentally superior technology stocks offer another way to invest in the demand behind it.
Data Center REITs: Frequently Asked Questions
What are the best data center REITs to buy?
On the latest Navellier Market Buzz, Wide Moat Research’s Brad Thomas named Digital Realty Trust (DLR) and Equinix (EQIX) as his two favorite blue-chip data center REITs. Both carry investment-grade balance sheets and long dividend records, and Brad places Equinix in his buy zone today.
Are data center REITs a good investment in 2026?
They offer a way to earn income from the AI infrastructure boom for investors who prefer dividends over betting on the next hot AI stock. Interest rates have pressured the whole REIT sector, which is part of what has created the current entry point, but the blue-chip names benefit from scarce supply and rising demand for AI, cloud, and connectivity.
What is a “sucker yield”?
It is a dividend yield that looks too good to be true. A very high headline yield, say 10% or more, is often a sign of a stressed balance sheet or a payout at risk of being cut, which can erode your principal. Focusing on dividend quality (strong credit ratings and a low payout ratio) matters more than chasing the highest number.
The Bottom Line on the Best Data Center REITs
The AI buildout is a physical story as much as a software one, and the best data center REITs let you own the ground floor of it. Digital Realty and Equinix both bring the balance-sheet quality that separates a durable dividend from a sucker yield, with Equinix the one in Brad’s buy zone right now. The key is to look beyond the AI story and focus on the fundamentals, dividend quality, and the price you pay.
Louis Navellier owns shares of Micron Technology (MU). This article is for educational purposes only and is not investment advice. Do your own research before investing.
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